Cryptocurrencies are not banned in India: Know the real facts

So, here came another news of RBI barring banks and financial institutions from dealing in cryptocurrencies. the news had the unfavorable impact on investors who are in panic mode finding a way to move out. it has happened earlier as well when FM MR. Arun Jaitley termed it as not a legal tender and people misinterpreted as the banning of cryptocurrency in India.
let us first get clarified on statements made by regulatory bodies and the real facts about its implementation.

'entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs. Regulated entities which already provide such services shall exit the relationship within a specified time.'



Statement simplifies as:

The quote specifically mentions that this directive only applies to the bodies that come directly under RBI’s guidelines. This doesn’t mean that this regulation will have no effect.

All banks registered in India come under RBI’s regulation and have to follow its directives. This is bad news for cryptocurrency exchanges in particular who rely on banks for their business. The exchanges and other cryptocurrency businesses now have to find a way around using the services of Indian banks. They will have the option of dealing in cash, for example. Things have been made harder, not outlawed.

The Real Facts and News:

  • RBI is a banking regulatory body and controls the monetary policies of India, but it is not a legislative body. 
  • RBI can set directive regulations for the bodies that come under its defined authority, but cannot control or penalize other businesses or individuals
  • A law to ban the use or trade of cryptocurrencies in India has to come from either the elected governments (whether central or state) or the judiciary (Supreme Court of India or the State High Courts).
  • Another thing to note here is that RBI has not defined the timeline by which the regulated entities have to stop providing services to virtual currency related businesses. 
  • It is allowed for them to continue providing services until RBI comes up with a further notice
  • With this regulation, it is the banks that will have to discontinue dealing with cryptocurrencies businesses once RBI has given them a formal notice along with a deadline. 
  •  The government of India has still not taken any decision regarding regulating cryptocurrencies in India till now.
  • The Supreme Court of India had to seek a response from Indian Government for a petition asking for regulation of cryptocurrencies. the government is yet to respond
Instead of getting panicked by the wave of misunderstandings through news, let's be patient and watch out for further progress and better ways.

 

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